Rural development sub-committee chairman Rhodri Glyn Thomas said it was important that the "highest standards of animal welfare and meat hygiene" continued to be met.

"The evidence presented to the committee suggested that all but three of Wales' abattoirs would disappear if these subsidies do not continue in one form or another," he said

"We also heard from farmers who are worried that any additional costs from trying to cover the subsidies gap would be handed onto them.

"I would urge the Welsh government to set up a review group with members from all parts of the meat industry to examine legislation and any possible reforms within the current EU framework.

"We must ensure the highest standards of animal welfare and meat hygiene are delivered in the most efficient manner, while protecting Wales' network of small and medium-sized abattoirs."

'So expensive'

Dai Havard, who owns The Abattoir in Caerphilly, said: "They are driving the meat industry underground.

"We operate a system where we do private kill for farmers but it's getting so expensive that people are going into farms and doing it there instead.

"We went down this route 11 years ago and a lot of abattoirs had to give up. They closed a tremendous amount of abattoirs.

"We desperately need these subsidies. If they take them away, we won't be able to operate."

The committee makes eight recommendations within its report, including that the assembly government does all it can to prevent the FSA from removing its subsidy to the industry until an alternative has been put in place.

It also recommends that the assembly government secures the future of Welsh abattoirs, prioritising support for small and medium sized operations serving local markets.

The FSA said it would not comment until the committee has presented its findings.

The assembly government said it will consider the report and respond in due course.